Item 1. Financial Statements

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

			March 31, 2024						December 31, 2023
			(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents			$	3,172.8					$	4,432.0
Accounts receivable, net of allowance for doubtful accounts of $23.0 and $17.2			7,905.8						8,659.8
Work in process			1,711.6						1,342.5
Other current assets			1,076.1						949.9
Total Current Assets			13,866.3						15,384.2
Property and Equipment at cost, less accumulated depreciation of $1,162.5 and $1,150.4			860.2						874.9
Operating Lease Right-Of-Use Assets			1,021.1						1,046.4
Equity Method Investments			64.8						66.4
Goodwill			10,693.8						10,082.3
Intangible Assets, net of accumulated amortization of $857.5 and $863.6			533.0						366.9
Other Assets			236.4						223.5
TOTAL ASSETS			$	27,275.6					$	28,044.6
LIABILITIES AND EQUITY:
Current Liabilities:
Accounts payable			$	10,337.7					$	11,634.0
Customer advances			1,238.2						1,356.2
Current portion of debt			750.3						750.5
Short-term debt			11.2						10.9
Taxes payable			381.0						351.6
Other current liabilities			2,235.4						2,142.8
Total Current Liabilities			14,953.8						16,246.0
Long-Term Liabilities			916.2						887.7
Long-Term Liability - Operating Leases			827.2						853.0
Long-Term Debt			5,501.0						4,889.1
Deferred Tax Liabilities			514.8						529.1
Commitments and Contingent Liabilities (Note 12)
Temporary Equity - Redeemable Noncontrolling Interests			428.4						414.6
Equity:
Shareholders’ Equity:
Preferred stock			—						—
Common stock			44.6						44.6
Additional paid-in capital			512.0						492.0
Retained earnings			10,751.3						10,571.5
Accumulated other comprehensive income (loss)			(1,415.9)						(1,337.6)
Treasury stock, at cost			(6,322.5)						(6,154.2)
Total Shareholders’ Equity			3,569.5						3,616.3
Noncontrolling interests			564.7						608.8
Total Equity			4,134.2						4,225.1
TOTAL LIABILITIES AND EQUITY			$	27,275.6					$	28,044.6

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share amounts)

			Three Months Ended March 31,
			2024						2023
REVENUE			$	3,630.5					$	3,443.3
OPERATING EXPENSES:
Salary and service costs			2,692.6						2,542.9
Occupancy and other costs			314.1						291.6
Real estate repositioning costs			—						119.2
Cost of services			3,006.7						2,953.7
Selling, general and administrative expenses			85.3						89.2
Depreciation and amortization			59.6						53.9
Total Operating Expenses			3,151.6						3,096.8
OPERATING INCOME			478.9						346.5
Interest Expense			53.8						54.9
Interest Income			27.0						35.6
INCOME BEFORE INCOME TAXES AND INCOME FROM EQUITY METHOD INVESTMENTS			452.1						327.2
Income Tax Expense			116.0						83.4
Income From Equity Method Investments			0.9						0.1
NET INCOME			337.0						243.9
Net Income Attributed To Noncontrolling Interests			18.4						16.4
NET INCOME - OMNICOM GROUP INC.			$	318.6					$	227.5
Net Income Per Share - Omnicom Group Inc.:
Basic			$	1.61					$	1.13
Diluted			$	1.59					$	1.11
Weighted Average Shares:
Basic			197.9						202.2
Diluted			200.1						204.5

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

			Three Months Ended March 31,
			2024						2023
NET INCOME			$	337.0					$	243.9
OTHER COMPREHENSIVE INCOME (LOSS):
Cash flow hedge:
Amortization of loss included in interest expense			1.4						1.4
Income tax effect			(0.4)						(0.4)
Cash flow hedge, net of tax			1.0						1.0
Defined benefit pension plans and postemployment arrangements:
Amortization of prior service cost			1.2						1.1
Amortization of actuarial losses			0.3						0.2
Income tax effect			(1.7)						(0.9)
Defined benefit pension plans and postemployment arrangements, net of tax			(0.2)						0.4
Foreign currency translation adjustment			(86.3)						51.8
Other Comprehensive Income (Loss)			(85.5)						53.2
TOTAL COMPREHENSIVE INCOME			251.5						297.1
Comprehensive Income Attributed To Noncontrolling Interests			11.2						16.2
COMPREHENSIVE INCOME - OMNICOM GROUP INC.			$	240.3					$	280.9

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except per share amounts)

			Three Months Ended March 31,
			2024						2023
Common Stock, shares			297.2						297.2
Common Stock, par value			$	44.6					$	44.6
ADDITIONAL PAID-IN CAPITAL:
Beginning Balance			492.0						571.1
Net change in noncontrolling interests			24.6						(38.5)
Change in temporary equity			(16.4)						21.3
Share-based compensation			22.1						20.7
Stock issued, share-based compensation			(10.3)						6.1
Ending Balance			512.0						580.7
RETAINED EARNINGS:
Beginning Balance			10,571.5						9,739.3
Net income			318.6						227.5
Common stock dividends declared			(138.8)						(141.3)
Ending Balance			10,751.3						9,825.5
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):
Beginning Balance			(1,337.6)						(1,437.9)
Other comprehensive income (loss)			(78.3)						53.4
Ending Balance			(1,415.9)						(1,384.5)
TREASURY STOCK:
Beginning Balance			(6,154.2)						(5,665.0)
Stock issued, share-based compensation			13.6						20.4
Common stock repurchased			(181.9)						(305.1)
Ending Balance			(6,322.5)						(5,949.7)
SHAREHOLDERS' EQUITY			3,569.5						3,116.6
NONCONTROLLING INTERESTS:
Beginning Balance			608.8						524.3
Net income			18.4						16.4
Other comprehensive income (loss)			(7.2)						(0.2)
Dividends to noncontrolling interests			(13.3)						(12.5)
Net change in noncontrolling interests			(42.0)						(13.4)
Ending Balance			564.7						514.6
TOTAL EQUITY			$	4,134.2					$	3,631.2
Dividends Declared Per Common Share			$	0.70					$	0.70

The accompanying notes to the consolidated financial statements are an integral part of these statements.

OMNICOM GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

			Three Months Ended March 31,
			2024						2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income			$	337.0					$	243.9
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of right-of-use assets			33.8						34.6
Amortization of intangible assets			25.8						19.3
Amortization of net deferred loss on interest rate swaps			1.4						1.4
Share-based compensation			22.1						20.7
Real estate repositioning costs			—						119.2
Other, net			(5.0)						(10.2)
Use of operating capital			(1,033.6)						(951.0)
Net Cash Used In Operating Activities			(618.5)						(522.1)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(23.1)						(23.1)
Acquisition of businesses and interests in affiliates, net of cash acquired			(801.5)						—
Other, net			(13.7)						(14.5)
Net Cash Used In Investing Activities			(838.3)						(37.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings			645.9						—
Change in short-term debt			0.3						1.0
Dividends paid to common shareholders			(138.8)						(142.3)
Repurchases of common stock			(180.1)						(305.1)
Proceeds from stock plans			2.1						26.3
Acquisition of additional noncontrolling interests			(10.4)						(29.2)
Dividends paid to noncontrolling interest shareholders			(13.3)						(12.5)
Payment of contingent purchase price obligations			(0.5)						(9.2)
Other, net			(21.8)						(8.0)
Net Cash Provided By (Used In) Financing Activities			283.4						(479.0)
Effect of foreign exchange rate changes on cash and cash equivalents			(85.8)						18.4
Net Decrease in Cash and Cash Equivalents			(1,259.2)						(1,020.3)
Cash and Cash Equivalents at the Beginning of Period			4,432.0						4,281.8
Cash and Cash Equivalents at the End of Period			$	3,172.8					$	3,261.5

The accompanying notes to the consolidated financial statements are an integral part of these statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in tables in millions, except per share amounts)

1. Presentation of Financial Statements

The terms “Omnicom,” “the Company,” “we,” “our” and “us” each refer to Omnicom Group Inc. and its subsidiaries, unless the context indicates otherwise. The accompanying unaudited consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP or GAAP, for interim financial information and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, in all material respects, of the information contained herein. These unaudited consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, or 2023 10-K. Results for the interim periods are not necessarily indicative of results that may be expected for the year.

Risks and Uncertainties

Global economic challenges, including geopolitical events, international hostilities, acts of terrorism, public health crises, high and sustained inflation in countries that comprise our major markets, high interest rates, and labor and supply chain issues could cause economic uncertainty and volatility. The impact of these issues on our business will vary by geographic market and discipline. We monitor economic conditions closely, as well as client revenue levels and other factors. In response to reductions in revenue, we can take actions to align our cost structure with changes in client demand and manage our working capital. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, reductions in client revenue, changes in client creditworthiness and other developments.

2. Revenue

Nature of our services

We provide an extensive range of advertising, marketing and corporate communications services through various client-centric networks that are organized to meet specific client objectives. Our networks, practice areas and agencies provide a comprehensive range of services in the following fundamental disciplines: Advertising & Media, Precision Marketing, Public Relations, Healthcare, Branding & Retail Commerce, Experiential, and Execution & Support. Advertising & Media includes creative services across digital and traditional media, strategic media planning and buying, performance media and data analytics services. Precision Marketing includes digital and direct marketing, digital transformation consulting, e-commerce operations, media execution, market intelligence and data and analytics. Public Relations services include corporate communications, crisis management, public affairs and media and media relations services. Healthcare includes corporate communications and advertising and media services to global healthcare and pharmaceutical companies. Branding & Retail Commerce services include brand and product consulting, strategy and research and retail marketing. Experiential marketing services include live and digital events and experience design and execution. Execution & Support includes field marketing, sales support, digital and physical merchandising, point-of-sale and product placement, as well as other specialized marketing and custom communications services. At the core of all our services is the ability to create or develop a client’s marketing or corporate communications message into content that can be delivered to a target audience across different communications mediums.

Economic factors affecting our revenue

Global economic conditions have a direct impact on our revenue. Adverse economic conditions pose a risk that our clients may reduce, postpone or cancel spending for our services, which would impact our revenue.

Revenue by discipline:

			Three Months Ended March 31,
			2024						2023
Advertising & Media			$	1,906.8					$	1,776.5
Precision Marketing			438.2						360.0
Public Relations			390.3						375.5
Healthcare			323.6						318.4
Branding & Retail Commerce			200.2						209.6
Experiential			159.9						147.8
Execution & Support			211.5						255.5
Revenue			$	3,630.5					$	3,443.3

Revenue by geographic market:

			Three Months Ended March 31,
			2024						2023
Americas:
North America			$	2,040.9					$	1,926.8
Latin America			96.5						74.0
EMEA:
Europe			1,005.8						951.9
Middle East and Africa			79.6						84.9
Asia-Pacific			407.7						405.7
Revenue			$	3,630.5					$	3,443.3

The Americas is comprised of North America, which includes the United States, Canada and Puerto Rico, and Latin America, which includes South America and Mexico. EMEA is comprised of Europe, the Middle East and Africa. Asia-Pacific includes Australia, Greater China, India, Japan, Korea, New Zealand, Singapore and other Asian countries. Revenue in the United States for the three months ended March 31, 2024, and 2023 was $1,925.9 million and $1,812.2 million, respectively.

Contract balances

Contract balances include work in process and customer advances, which primarily consist of advance billings to customers in accordance with the terms of the client contracts, primarily for the reimbursement of third-party costs.

			March 31, 2024						December 31, 2023						March 31, 2023
Work in process:
Media and production costs			$	788.8					$	664.4					$	710.9
Unbilled fees and costs and contract assets			922.8						678.1						798.0
Work in process			$	1,711.6					$	1,342.5					$	1,508.9
Customer advances			$	1,238.2					$	1,356.2					$	1,279.6

There were no impairment losses to work in process recorded in the three months ended March 31, 2024 and 2023.

3. Net Income per Share

Basic and diluted net income per share:

			Three Months Ended March 31,
			2024						2023
Net Income - Omnicom Group Inc.			$	318.6					$	227.5
Weighted Average Shares (millions):
Basic			197.9						202.2
Dilutive stock options and restricted shares			2.2						2.3
Diluted			200.1						204.5
Net Income per Share - Omnicom Group Inc.:
Basic			$1.61						$1.13
Diluted			$1.59						$1.11

4. Business Combinations

On January 2, 2024, we acquired Flywheel Digital, the digital commerce business of Ascential plc, for a net cash purchase price of approximately $845 million. The financial statements of Flywheel Digital are included in our consolidated financial statements as of and for the period ended March 31, 2024. The acquisition of Flywheel Digital did not have a material effect on our financial position or results of operations in the three months ended March 31, 2024 and is not expected to do so for the remainder of the year. The principal tangible assets and liabilities acquired were net working capital, and the intangible assets acquired were primarily comprised of customer relationships, intellectual property, trade name and goodwill. The allocation of the purchase price to the underlying assets is undergoing a formal valuation process that is not yet complete. As a result, as of March 31, 2024, we estimated amortizable intangible assets to be $182.6 million. We will likely revise this estimate, however, we do not expect any changes to be material to our financial position and results of operations.

5. Goodwill and Intangible Assets

Change in goodwill:

						Three Months Ended March 31,
						2024						2023
January 1						$	10,082.3					$	9,734.3
Acquisitions						688.3						—
Dispositions						(5.9)						(1.4)
Foreign currency translation						(70.9)						59.7
March 31						$	10,693.8					$	9,792.6

The increase in goodwill during the three months ended March 31, 2024 is primarily attributable to the acquisition of Flywheel Digital. There were no goodwill impairment losses recorded in the three months ended March 31, 2024 and 2023, and there are no accumulated goodwill impairment losses.

Intangible assets:

			March 31, 2024																		December 31, 2023
			Gross Carrying Value						Accumulated Amortization						Net Carrying Value						Gross Carrying Value						Accumulated Amortization						Net Carrying Value
Acquired intangible assets and internally developed strategic platform assets			$	1,084.3					$	(585.6)					$	498.7					$	902.6					$	(572.9)					$	329.7
Other purchased and internally developed software			306.2						(271.9)						34.3						327.9						(290.7)						37.2
Total Intangible Assets			$	1,390.5					$	(857.5)					$	533.0					$	1,230.5					$	(863.6)					$	366.9

Amortization of intangible assets:

			Three Months Ended March 31,
			2024						2023
Acquired intangible assets and internally developed strategic platform assets			$	21.5					$	14.8
Other purchased and internally developed software			4.3						4.5
Amortization Expense			$	25.8					$	19.3

6. Debt

Credit Facilities

We have a $2.5 billion unsecured multi-currency revolving credit facility, or Credit Facility, terminating on June 2, 2028. On January 3, 2024, we entered into a $600 million Delayed Draw Term Loan Agreement, or Term Loan Facility, terminating on December 31, 2026. We have the ability to issue up to $2 billion of U.S. Dollar denominated commercial paper and issue up to the equivalent of $500 million in British Pounds or Euro under a Euro commercial paper program. During the three months ended March 31, 2024, there were no drawings under the Credit Facility or the Term Loan Facility, and no commercial paper issuances. In addition, certain of our international subsidiaries have uncommitted credit lines, aggregating $507.0 million, that are guaranteed by Omnicom. All of these facilities provide additional liquidity sources for operating capital and general corporate purposes.

The Credit Facility and Term Loan Facility each contain a financial covenant that requires us to maintain a Leverage Ratio of consolidated indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation, amortization and non-cash charges) of no more than 3.5 times for the most recently ended 12-month period. At March 31, 2024, we were in compliance with this covenant as our Leverage Ratio was 2.5 times. The Credit Facility and Term Loan Facility do not limit our ability to declare or pay dividends or repurchase our common stock.

Short-Term Debt

Short-term debt of $11.2 million and $10.9 million at March 31, 2024 and December 31, 2023, respectively, represented bank overdrafts and short-term borrowings primarily of our international subsidiaries. Due to the short-term nature of this debt, carrying value approximates fair value.

Long-Term Debt

Long-term debt:

			March 31, 2024						December 31, 2023
3.65% Senior Notes due 2024			$	750.0					$	750.0
3.60% Senior Notes due 2026			1,400.0						1,400.0
€500 million 0.80% Senior Notes due 2027			539.4						553.0
2.45% Senior Notes due 2030			600.0						600.0
4.20% Senior Notes due 2030			600.0						600.0
€500 million 1.40% Senior Notes due 2031			539.4						553.0
2.60% Senior Notes due 2031			800.0						800.0
€600 million 3.70% Senior Notes due 2032			647.3						—
£325 million 2.25% Senior Notes due 2033			410.2						413.9
Long-Term Debt, Gross			6,286.3						5,669.9
Unamortized discount			(8.9)						(7.8)
Unamortized debt issuance costs			(25.7)						(22.3)
Unamortized deferred loss from settlement of interest rate swaps, net			(0.4)						(0.2)
Current portion			(750.3)						(750.5)
Long-Term Debt			$	5,501.0					$	4,889.1

On March 6, 2024, Omnicom Finance Holdings plc, or OFH, a U.K.-based wholly owned subsidiary of Omnicom, issued €600 million 3.70% Senior Notes due 2032. The net proceeds from the issuance, after deducting the underwriting discount and offering expenses, were $643.1 million. Omnicom has fully and unconditionally guaranteed the obligations of OFH.

Our 2.45% Senior Notes due 2030, 4.20% Senior Notes due 2030 and 2.60% Senior Notes due 2031 are senior unsecured obligations of Omnicom that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and its wholly owned finance subsidiary, Omnicom Capital Inc., or OCI, are co-obligors under the 3.65% Senior Notes due 2024 and the 3.60% Senior Notes due 2026. These notes are a joint and several liability of Omnicom and OCI, and Omnicom unconditionally guarantees OCI’s obligations with respect to the notes. OCI provides funding for our operations by incurring debt and lending the proceeds to our operating subsidiaries. OCI’s assets primarily consist of cash and cash equivalents and intercompany loans made to our operating subsidiaries, and the related interest receivable. There are no restrictions on the ability of OCI or Omnicom to obtain funds from our subsidiaries through dividends, loans, or advances. Such notes are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness.

Omnicom and OCI have, jointly and severally, fully, and unconditionally guaranteed the obligations of OFH with respect to the €500 million 0.80% Senior Notes due 2027 and the €500 million 1.40% Senior Notes due 2031, and Omnicom has fully and unconditionally guaranteed the obligations of OFH with respect to the €600 million 3.70% Senior Notes due 2032, collectively the Euro Notes. OFH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in Europe, Australia, and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom, OCI or OFH to obtain funds from their subsidiaries through dividends, loans, or advances. The Euro Notes and the related guarantees are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OFH and each of Omnicom and OCI, as applicable.

Omnicom has fully and unconditionally guaranteed the obligations of Omnicom Capital Holdings plc, or OCH, a U.K.-based wholly owned subsidiary of Omnicom, with respect to the £325 million 2.25% Senior Notes due 2033, or the Sterling Notes. OCH’s assets consist of its investments in several wholly owned finance companies that function as treasury centers, providing funding for various operating companies in EMEA, Australia, and other countries in the Asia-Pacific region. The finance companies’ assets consist of cash and cash equivalents and intercompany loans that they make or have made to the operating companies in their respective regions and the related interest receivable. There are no restrictions on the ability of Omnicom or OCH to obtain funds from their subsidiaries through dividends, loans, or advances. The Sterling Notes and the related guarantee are senior unsecured obligations that rank equal in right of payment with all existing and future unsecured senior indebtedness of OCH and Omnicom, respectively.

7. Segment Reporting

Our branded agency networks operate in the advertising, marketing and corporate communications services industry, and are organized into agency networks, virtual client networks, regional reporting units and operating groups or practice areas. Our networks, virtual client networks and agencies increasingly share clients and provide clients with integrated services. The main economic components of each agency are employee compensation and related costs, direct service costs and occupancy and other costs, which include rent and occupancy costs, technology costs and other overhead expenses. Therefore, given these similarities, we aggregate our six operating segments, which are our agency networks, into one reporting segment.

The agency networks' regional reporting units comprise three principal regions: the Americas, EMEA and Asia-Pacific. The regional reporting units monitor the performance of and are responsible for the agencies in their region. Agencies within the regional reporting units serve similar clients in similar industries and, in many cases, the same clients, and have similar economic characteristics.

Revenue and long-lived assets and goodwill by geographic region:

			Americas						EMEA						Asia-Pacific
March 31, 2024
Revenue - Three months ended			$	2,137.4					$	1,085.4					$	407.7
Long-lived assets and goodwill			$	8,092.0					$	3,776.5					$	706.6
March 31, 2023
Revenue - Three months ended			$	2,000.8					$	1,036.8					$	405.7
Long-lived assets and goodwill			$	7,642.2					$	3,377.2					$	734.4

8. Income Taxes

Our effective tax rate for the three months ended March 31, 2024 increased period-over-period to 25.7% from 25.5%. The effective tax rate for three months ended March 31, 2024 includes the favorable impact from the resolution of certain non-U.S. tax positions of $7.5 million. The effective tax rate for the three months ended March 31, 2023 includes the favorable impact from the resolution of certain tax positions of approximately $10.0 million of previously unrecognized tax benefits, partially offset by approximately $6.0 million related to a lower tax benefit in certain jurisdictions for the real estate repositioning costs in the quarter, and an increase in the U.K. statutory tax rate.

The Inflation Reduction Act of 2022, or IRA, levies a 1% excise tax on net stock repurchases after December 31, 2022. The excise tax is recorded as a cost of acquiring treasury stock and is not material. Additionally, the IRA imposes a 15% corporate alternative minimum tax, or CAMT, for tax years beginning after December 31, 2022. The CAMT does not have a material impact on our results of operations or financial position.

Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development, or OECD. Under such rules, a minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.

Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. We are continuing to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business. We do not expect the provisions effective in 2024 to have a materially adverse impact on our results of operations, financial position or cash flows.

At March 31, 2024, our unrecognized tax benefits were $168.7 million. Of this amount, approximately $161.8 million would affect our effective tax rate upon resolution of the uncertain tax positions.

9. Pension and Other Postemployment Benefits

Net periodic benefit expense:

			Defined Benefit Pension Plans												Postemployment Arrangements
			Three Months Ended March 31,
			2024						2023						2024						2023
Service cost			$	0.6					$	0.9					$	0.8					$	0.9
Interest cost			1.0						2.3						1.5						1.4
Expected return on plan assets			(0.2)						(0.2)						—						—
Amortization of prior service cost			0.1						0.1						1.1						1.0
Amortization of actuarial losses			0.2						0.2						0.1						—
Total net periodic benefit expense			$	1.7					$	3.3					$	3.5					$	3.3

We contributed $0.1 million to our defined benefit pension plans in each of the three months ended March 31, 2024 and 2023.

10. Real Estate Repositioning Costs

In connection with the transition to a flexible working environment, a hybrid model which allows for partial remote work, we took certain actions in the first quarter of 2023 to reduce and reposition our office lease portfolio.

As a result, for the three months ended March 31, 2023, operating expenses included $119.2 million ($91.0 million after tax), primarily related to non-cash impairment charges for the operating lease right-of-use, or ROU, assets. Substantially all of the operating lease payments related to the ROU assets will be paid out over two years. There were no real estate repositioning charges during the three months ended March 31, 2024.

11. Supplemental Cash Flow Data

Change in operating capital:

			Three Months Ended March 31,
			2024						2023
(Increase) decrease in accounts receivable			$	884.2					$	1,065.0
(Increase) decrease in work in process and other current assets			(393.9)						(295.6)
Increase (decrease) in accounts payable			(1,347.0)						(1,458.8)
Increase (decrease) in customer advances, taxes payable and other current liabilities			(157.8)						(212.9)
Change in other assets and liabilities, net			(19.1)						(48.7)
Increase (decrease) in operating capital			$	(1,033.6)					$	(951.0)

Supplemental financial information:

			Three Months Ended March 31,
			2024						2023
Income taxes paid			$	69.4					$	73.6
Interest paid			$	8.5					$	13.7

Non-cash increase in lease liabilities:

Operating leases			$	47.2					$	41.2
Finance leases			$	12.3					$	11.7

12. Commitments and Contingent Liabilities

In the ordinary course of business, we are involved in various legal proceedings. We do not presently expect that such proceedings will have a material adverse effect on our results of operations or financial position.

13. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of income taxes:

			Cash Flow Hedge						Defined Benefit Pension Plans and Postemployment Arrangements						Foreign Currency Translation						Total
			Three Months Ended March 31, 2024
January 1			$	(8.1)					$	(42.7)					$	(1,286.8)					$	(1,337.6)
Other comprehensive income (loss) before reclassifications			—						—						(79.1)						(79.1)
Reclassification from accumulated other comprehensive income (loss)			1.0						(0.2)						—						0.8
March 31			$	(7.1)					$	(42.9)					$	(1,365.9)					$	(1,415.9)

			Three Months Ended March 31, 2023
January 1			$	(12.1)					$	(41.3)					$	(1,384.5)					$	(1,437.9)
Other comprehensive income (loss) before reclassifications			—						—						52.0						52.0
Reclassification from accumulated other comprehensive income (loss)			1.0						0.4						—						1.4
March 31			$	(11.1)					$	(40.9)					$	(1,332.5)					$	(1,384.5)

14. Fair Value

Financial assets and liabilities are recorded at fair value based on the following:

• Level 1**: Unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2**: Unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical assets or liabilities in markets that are not active; and model-derived valuations with observable inputs.

• Level 3:** Unobservable inputs for the asset or liability.

Financial assets and liabilities measured at fair value on a recurring basis:

			March 31, 2024																											December 31, 2023
			Level 1						Level 2						Level 3						Total									Level 1						Level 2						Level 3						Total
Assets:
Cash and cash equivalents			$	3,172.8																	$	3,172.8								$	4,432.0																	$	4,432.0
Marketable equity securities			0.8																		0.8									0.9																		0.9
Cross currency swaps - net investment hedge									$	4.2											4.2															$	—											—
Liabilities:
Cross currency swaps - net investment hedge									—												—															$	6.6											$	6.6
Contingent purchase price obligations															$	258.6					258.6																					$	229.5					229.5

Changes in contingent purchase price obligations:

			Three Months Ended March 31,
			2024						2023
January 1			$	229.5					$	115.0
Acquisitions			26.5						21.6
Revaluation and interest			3.2						0.4
Payments			(0.5)						(9.2)
Foreign currency translation			(0.1)						0.2
March 31			$	258.6					$	128.0

Carrying amount and fair value of our financial assets and liabilities:

			March 31, 2024												December 31, 2023
			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Assets:
Cash and cash equivalents			$	3,172.8					$	3,172.8					$	4,432.0					$	4,432.0
Marketable equity securities			0.8						0.8						0.9						0.9
Cross currency swaps - net investment hedge			4.2						4.2						—						—
Non-marketable equity securities			12.5						12.5						6.7						6.7
Liabilities:
Short-term debt			$	11.2					$	11.2					$	10.9					$	10.9
Cross currency swaps - net investment hedge			—						—						6.6						6.6
Contingent purchase price obligations			258.6						258.6						229.5						229.5
Long-term debt			6,251.3						5,822.1						5,639.6						5,237.8

The estimated fair values of the cross-currency swaps are determined using model-derived valuations, taking into consideration foreign currency rates, interest rates, and counterparty credit risk. The estimated fair value of the contingent purchase price obligations is calculated in accordance with the terms of each acquisition agreement and is discounted. The fair value of long-term debt is based on quoted market prices.

15. Subsequent Events

We have evaluated events subsequent to the balance sheet date and determined that there have not been any events that have occurred that would require additional adjustments to, or disclosures in, these consolidated financial statements.